Analyze this: 2000 revisited

Internet marketing in 2000 has been characterized as unpredictable and embryonic. Looking back, it’s easy to understand why. Approximately 130 dot-coms crashed and burned this year. Internet business models were created, tested and discarded. And perhaps for the first time, brick-and-mortar firms and dot-coms no longer eyed each other as the enemy.

In the midst of it all, new trends were born while others evolved. Here’s what online marketers said about last year’s most significant Internet marketing trends and the forces behind them.

• Dot-com bubble bursts, not-coms get Net savvy

Funding sources began scrutinizing the financial performance of dot-coms, said Ralph Oliva, executive director of the Institute for the Study of Business Markets, Smeal College of Business at Penn State University. At the same time, brick-and-mortars fought back with aggressive e-business initiatives. "Brick-and-mortar firms went beyond a Web site and jumped from e-commerce to e-business," Oliva said.

• Alliances, e-marketplaces proliferate

To ease that transition to e-business, marketers worked together to build technology or strategic alliances and exchanges. One example is Elemica, a new online marketplace created by 12 large chemical companies. Partnering helped reduce the costs and technical challenges of e-business and was the quickest way to get into the game, said Govi Rao, e-business leader for powder coatings at Rohm and Haas Co., a specialty chemical technology company in Philadelphia that is participating in Elemica. Rao estimates the number of online marketplaces to be about 2,000—more than twice the number that existed a year ago. "Alliances are almost an absolute necessity in a networked economy,” Rao said.

• The Net goes global

Last year was the turning point for Web globalization, said Charlie Baxter, president-CEO of eTranslate Inc., a provider of Web globalization solutions based in San Francisco. Businesses woke up to international e-commerce opportunities—opportunities that analysts project will be very lucrative. According to eMarketer Inc., global revenues from b-to-b e-commerce will soar to $1.26 trillion in 2003, compared with $185 billion today. Major software applications were designed to be world-ready, and analysts began validating e-commerce by drilling into different aspects of its markets, Baxter said. "Globalization is like a tsunami," he said. "It’ll continue to build because its density and strength are enormous."

• Web site goals shift from driving traffic to driving transactions

Marketers became more focused on driving online sales than on driving traffic to their Web sites, said Laura Berland, co-founder and exec VP at ORB Inc., a marketing and technology solutions provider in New York. "They became more concerned with ROI [return on investment] rather than the branding aspects of their marketing programs," Berland said. "Ad dollars put against pure branding objectives couldn’t be justified."

• E-mail marketing gets serious

Because of last year’s tremendous growth of customer databases and e-mail marketers, the medium has come of age, said Tony Priore, senior VP-marketing at Yesmail.com Inc., an e-mail marketing company in Chicago. (Since being interviewed for this article, Priore was named president of JobsOnline.com Inc.) Jupiter Communications reported that e-mails sent for customer retention had an average click-through rate of 10% and a conversion rate of 5%. E-mails sent for customer acquisition had an average click-through rate of 7% with a conversion of 2.5%. "E-mail marketing used to be an afterthought," Priore said, adding that many large, established companies are adopting the medium. "It now has the serious consideration of marketers as a legitimate, integrated marketing tool that’s used from the planning stage forward," Priore said. But e-mail’s success also has caused marketers concern for the coming year—as prospects receive more e-mail, they’re less likely to read each message.

• Webcasting becomes widespread

Webcasting matured last year for a number of reasons, said David Holden, manager of e-commerce applications and services at Eastman Chemical Co., based in Kingsport, Tenn. He points to advanced technology, an increase in bandwidth and more companies desiring to host such events. "Most companies had some sort of Webcast for their quarterly reviews," he said, adding that Eastman is evaluating different online events such as customer training and product introduction. "It’s becoming a standard practice."

• Wireless gains ground

The year 2000 was the year for hyping wireless marketing and advertising, said Evan Grossman, COO of HookMedia Inc., an Internet marketing firm in Boston. But it won’t evolve into a strong customer relationship management tool until universal standards are created and pricing and privacy issues are resolved, Grossman said. According to a ResearchPortal.com report on wireless application spending, only 3% of IT software spending among North American enterprise businesses (those with more than 500 employees) is spent on wireless applications. That number is projected to climb to 9% of total IT software spending by 2002. "A lot of rules are still being written," said Grossman, who expects wireless technology to become as widely used as the Internet by 2004.

• Data mining meets the millennium

Because of the increased pressure to become more profitable, businesses began using Internet business intelligence much more efficiently, said Nick Besbeas, VP-sales and marketing at digiMine Inc., a data-mining and business intelligence service provider in Seattle. "For the first time, companies put business intelligence into a usable asset and deployed solutions around it," Besbeas said. "They realized that taking action from data was absolute key to their success."

• Marketers learn the art of online media buying

With more detailed information about Web site visitors, marketers began to refine their online media buys. Prior to this year, "banners were not used as appropriately as they could have been because there wasn’t enough understanding of where they should be placed to get the best results," said Karen Breen Vogel, VP-marketing and business development at B2BWorks, a Chicago-based b-to-b online ad network. With proper placement, banners began evolving from broadcast tools to customer relationship vehicles because they solicited feedback from targets that were ready to respond.

• Ad impressions rise, fall and rise again

For the week beginning Jan. 3, 2000, the number of b-to-b online ad impressions was 180 million, according to AdRelevance. That number grew to 1.1 billion for the week of Sept. 25, dipped to 810 million in November, and climbed again to 1 billion at the end of December. When click-through rates fell below traditional media response rates, people questioned the effectiveness of online advertising and withdrew ad dollars—especially after April’s stock market crash, said Laura Mitrovich, program manager in the Internet marketing strategies planning service at The Yankee Group. But Mitrovich expects a rebound. "Ads will be more focused and targeted, and grandiose marketing plans may be abandoned in favor of more tactical, measurable strategies."

B-to-b marketing 2001: Out with the bold, new, in with the tried, true
Michael Hinshaw doesn’t envision marketers in the future using bold, new products or techniques to reach prospects. Instead, he said, they’ll simply capitalize on current trends.
"The trends we’re beginning to see now will intensify over the next several years," said Hinshaw, president-CEO of Verida Internet Corp., a strategic marketing communications agency in San Francisco.
Take data mining. He said the technique will turn into a deeply personalized form of customer relationship management because it will help tailor offerings to customers’ specific needs. It will become so sophisticated, he said, that marketers will not only know what products or services their customers need but also when they’ll need them.
Likewise, e-mail marketing will be more interactive and targeted, with customers increasingly learning about new products and services through their wireless devices. What’s more, marketers will have more access to real-time data about customer preferences and behavior.
Still, he said, it’ll take another several years for b-to-b marketers, armed with new analytical and testing methods, to take full advantage of these customer views and build effective marketing programs.
"Internet marketers will combine sophisticated technology with their ability to analyze data to connect with their customers," he said. "That’s where the promise of Internet marketing lies."